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This legal opinion, commissioned by Oil Change International, for the first time lays out the international law obligations of Export credit agencies (ECAs) that are responsible for tens of billions of dollars per year in support for fossil fuels.
The main conclusion: ECAs – and the governments that oversee them – could be in violation of their international legal obligations if they do not take action to reduce their financing of fossil fuel-related activities imminently.
The legal opinion considers the international law framework that applies to ECAs which act on behalf of States or are regulated by them when operating as separate entities. Drawing primarily on customary international law, as well as on human rights, climate change agreements and OECD instruments, it concludes: “given the substantial contribution of ECAs to enable the emissions of greenhouse gases associated with existing and new fossil fuel-related projects/activities, in principle, States comply with their duty of due diligence only if they do their utmost to reduce their contribution to the problem, rather than extending it or increasing it.”
The legal opinion is written by two expert lawyers, Jorge E. Viñuales, a Professor at the University of Cambridge (UK) and Kate Cook, a barrister at London-based Matrix Chambers. Viñuales is a specialist in public international law, climate and energy law and investment law and Cook is a specialist in matters of public international law, climate change and human rights law.
According to the expert authors, State sponsors of ECAs must pursue the following five key actions to meet their international law obligations in relation to climate change:
- Not finance new fossil fuel-related projects/activities or increase the financing of existing ones;
- Decrease existing support for fossil fuel-related projects and activities within a clear, scientifically-based time-frame;
- Proactively avoid locking in fossil fuel projects and activities which may use up a significant part of the remaining carbon budget;
- Adopt and proactively implement adequate procedures to assess the carbon footprint of potential projects; and
- Implement performance guidelines to monitor ECA activities in the context of the climate emergency.